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Tuesday, 31 January 2017

"The Gulf Cooperation Council countries’ currencies have been pegged to the US dollar (Kuwait’s is pegged to a dollar-dominated basket of currencies) for nearly three decades and the dollar peg has served these countries well. It has provided a credible anchor of stability, reduced transactions costs and simplified the conduct of macroeconomic policy. Meanwhile, despite some progress in diversification, GCC countries remain dependent, to varying degrees, on oil and gas and related activities.

With the oil price plunge since mid-2104, conditions changed in fundamental and possibly irreversible ways. As a result, GCC countries have had to call into question the appropriateness of policies that had been in place for decades. The issues are especially pressing for Saudi Arabia, with the largest and most complex of the six economies in the region and, appropriately, with the most ambitious plans to overhaul its economy.

The far-reaching transformation plan announced by Deputy Crown Prince Mohammad bin Salman last year challenged tradition by proposing partial privatisation of Aramco, the ‘jewel in the crown’ of the Saudi industrial structure, reducing subsidies, introducing domestic taxation in the form of a VAT from 2018 and, most critically, altering the structure of the labour market for Saudi nationals, including women."

"Oil prices will not reach "levels desired" by Iraq before the end of 2018 or 2019, Iraqi Prime Minister Haider al-Abadi said on Tuesday in Baghdad. "Demand has increased and this has helped raise the prices but it won't return to the level of 2013" when crude exceeded $100 a barrel, he told a news conference. "Oil will not reach a desired level before 2018 or 2019," he added, without indicating Iraq's desired price."

"Abu Dhabi lenders First Gulf Bank (FGB) and National Bank of Abu Dhabi (NBAD), which are merging to create one of the largest banks in the Middle East and Africa, posted contrasting fourth-quarter results on Tuesday.

FGB, Abu Dhabi's third-largest lender by assets, reported an 11 percent fall in net profit for the three months to Dec. 31, narrowly beating analysts' expectations but was outshone by a 28 percent profit jump at NBAD.

The two banks, which are due to combine as a single entity from April 1, will disclose combined results from the second quarter onwards, NBAD Chief Financial Officer James Burdett said on an analysts' call on Tuesday."

"Abu Dhabi Commercial Bank on Tuesday posted a 16 percent drop in fourth-quarter profit, in line with analysts' forecasts, as impairments for doubtful loans weighed on its bottom line.

The emirate's second-largest bank by assets made a net profit attributable to shareholders of 1.0 billion dirhams ($272 million) in the three months to Dec. 31, compared to 1.19 billion dirhams in the same period a year ago.

Three analysts polled by Reuters had on average forecast a net profit of 979 million dirhams."

"President Donald Trump spent his first week making good on even his most controversial campaign promises when it comes to immigration, leaving business leaders questioning what comes next and what it could mean for the U.S. economy.

Last week, the new commander in chief suspended visa issuance in seven majority-Muslim countries — Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen — for 90 days as visa vetting rules are reviewed. Trump's team is also drafting an executive order aimed at overhauling the work-visa programs, pushing companies to hire Americans first and giving priority to more highly paid foreign recruits. And there's more to come, White House Press Secretary Sean Spicer told reporters on Monday.

"You'll see both through executive action and through comprehensive legislative action a way to address immigration as a whole, and the visa program," Spicer said."

"Stock markets in the Middle East fell on Tuesday as the travel curbs ordered by U.S. President Donald Trump hit sentiment towards equities globally. Middle Eastern bourses most exposed to foreign fund flows underperformed the region. Egypt's blue-chip index dropped 2.0 percent as foreign funds were net sellers of shares, bourse data showed. It was one of only a few days of foreign net selling since the Egyptian pound was floated on Nov. 3. Fund managers believe that in the worst case, flows of U.S. trade, aid and investment could be hit by Trump's policies. Companies favoured by foreign funds were hit hard on Tuesday with investment firm EFG Hermes down 5.4 percent."

"Kuwait has taken a page out of Saudi Arabia's playbook and is seeking to steer its economy away from the heavy reliance on oil. Bloomberg's Zainab Fattah reports on "Bloomberg Markets: Middle East." (Source: Bloomberg)"

"Oil-services giant Halliburton Co. told employees to stay put. Another global oil company is reconsidering whether to place a crude trader in Houston. And universities that train energy workers across the country estimated that hundreds of students may be affected. Of all the energy sectors that may feel the pain of President Donald Trump’s order to temporarily ban people from seven majority-Muslim countries, oil and natural gas companies -- industries he vowed to help during his election campaign -- stand to be hit the hardest. On Monday, energy companies led declines in the Standard & Poor’s 500 Index as investors weighed Trump’s first week in office. “Oil and gas is going to have the most heartburn from this,” Michael Webber, deputy director of the Energy Institute at University of Texas at Austin, said by phone Monday. “Other parts of the energy sector, like the electricity sector, are more domestically situated with its workforce and its assets.”"

"A row over U.S. visa bans may further weaken Iranian President Hassan Rouhani's efforts to attract foreign investors to Iran, particularly if it slows the implementation of deals for Western aircraft, officials and analysts said.

The deals for 80 Boeing jets and 100 from Europe's Airbus struck last year are seen by Western investors as a crucial test as they seek business in Iran in the wake of the nuclear deal that led to the lifting of most sanctions.

People involved in the airline deals say it is too early to assess the impact of the U.S. visa ban but worry that hardening rhetoric in Tehran and Washington can only add to a list of complications that could slow, if not endanger, the jet sales.

"Vodafone Qatar, an affiliate of Vodafone Group, reported a narrower third-quarter loss on Tuesday. The telecoms operator made a net loss of 31 million riyals ($8.3 million) in the three months to Dec. 31, the company said in a release. That compares with a loss of 72 million riyals in the prior-year period. Vodafone Qatar, whose financial year starts on April 1, has yet to make a quarterly net profit since ending state-controlled Ooredoo's domestic monopoly in 2009 as the latter has fought hard to bolster its revenue share."

"Emirates Integrated Telecommunications Co (EITC), the holding company for United Arab Emirates phone service provider du, will launch Virgin Mobile as a new brand in the UAE, EITC's chief executive Osman Sultan said on Tuesday. EITC will have full ownership, management and operation of the Virgin Mobile brand in the country, Sultan told a news conference, adding that services under the brand would start "within weeks" and focus on a consumer customer base. Virgin Mobile will use EITC's network and infrastructure in the same way that du does, and EITC has created an internal business unit to handle the brand in the UAE, he said. Karim Benkirane has been appointed managing director of Virgin Mobile UAE's operations, reporting to Sultan."

"Gulf stock markets fell in early trade on Tuesday in line with global equities after investor sentiment was soured by the travel curbs ordered by U.S. President Donald Trump. Kuwait's index pulled back a further 1.6 percent after dropping 1.5 percent on Monday. Two-thirds of the 15 most valuable shares on the exchange fell, with Gulf Bank dropping 3.7 percent. The market had risen sharply since the start of the year partly in anticipation of Monday night's briefing by government ministers on economic development plans. But the ministers announced very little in the way of new policy initiatives, efforts to accelerate economic development or policies to boost economic growth. "

Monday, 30 January 2017

"Saudi Arabia is ready to implement a region-wide value added tax, the cabinet said on Monday, giving final approval to the measure which will take effect next year.
Cabinet “decided to approve the Unified Agreement for Value Added Tax” to be implemented throughout the six-member Gulf Cooperation Council (GCC), the official Saudi Press Agency said.
“A Royal Decree has been prepared,” it said."

The contracts, which are open to both local and foreign companies, are part of the third and final infrastructure package for the event, Dubai Expo 2020 said in a statement on Monday. Another 98 non-construction orders worth as much as 360 million dirhams will be awarded."

"(The following statement was released by the rating agency) DUBAI/LONDON, January 30 (Fitch) Fitch Ratings has assigned Bank of Sharjah's PJSC (BOS; BBB+/Stable/bb) new Euro Medium Term Note (EMTN) Programme a long-term rating of 'BBB+' and short-term rating of 'F2'. The ratings of the programme apply only to senior issuance. There is no assurance that notes issued under the programme will be assigned a rating, or that the rating assigned to a specific issue under the programme will have the same rating as the programme. KEY RATING DRIVERS The notes under the programme will be issued by BOS Funding Limited in the Cayman Islands. BOS Funding Limited is a fully owned subsidiary of BOS that is set up solely to act as the issuer of debt funding."

"Dubai-based courier Aramex expects profit and revenue growth to slow to below 10 percent this year, with less of a boost from acquisitions than in 2016 and growth moderating in some markets, it said on Monday. Chief Executive Hussein Hachem told a press conference he was cautious about the business-to-business market, but confident on the business-to-consumer category, in part due to an expected 30 percent rise this year in e-commerce deliveries. Hachem did not identify which markets were slowing. Aramex operates across the world including Asia, Australia, the Middle East and Africa."

"Saudi Arabia's government has decided to suspend its monthly issue of domestic bonds in January, refraining from issuing local currency bonds for the fourth month in a row, the Maaal financial news service reported on Monday. The suspension is possible because higher oil prices have improved government revenues and the government's $17.5 billion issue of international bonds last October was successful, Maaal quoted unnamed official sources as saying. Liquidity at banks is now good, after the government started to make delayed payments of its debts to the private sector, and banks would be able to cover any local bond issue if one occurred, the sources added. "

"Abu Dhabi Global Market, the capital’s financial free zone, has attracted more than 50 special purpose vehicles (SPVs) to register in its jurisdiction as part of a strategy to widen its offering to investors and corporates.

SPVs allow companies to own assets at arm’s length and can be used for specific assets or transactions. They are deployed for a variety of purposes including efficient corporate and financial structuring, risk management and ring-fencing of assets and liabilities.

Many SPVs are established in offshore centres around the world, but ADGM is keen to give its members the opportunity to keep financial assets and transactions in the UAE."

"Lukoil PJSC is seeking opportunities for growth in the Middle East as Iran opens more of its oil fields to international partners, according to the Russian energy company’s regional head. The Moscow-based company plans to add output from the region to existing operations in Iraq and Egypt as long as it finds projects with production costs as low as those in Russia, Gati Al-Jebouri, Lukoil’s head of upstream for the Middle East, told reporters in Dubai. “Iran is our target area at the moment,” Al-Jebouri said."

"Major Gulf stock markets were weak in early trade on Monday in response to soft global equities and crude oil prices, although Dubai courier firm Aramex soared on a fourth-quarter earnings beat. Saudi Arabia's index fell 0.1 percent after 20 minutes of trade. Half of the 14 listed petrochemical makers declined, but Nama Chemicals jumped 8.0 percent after soaring its 10 percent daily limit on the two previous days following its announcement of plan to recover from major losses. In Dubai, Aramex jumped 9.0 percent after reporting a 129 percent jump in fourth-quarter net profit to 131.8 million dirhams ($35.9 million); EFG Hermes and SICO Bahrain had forecast 94.0 million dirhams and 77.5 million dirhams respectively."

"Saudi Aramco, the world’s largest oil company, is considering as much as $5 billion of investments in renewable energy firms as part of plans to diversify from crude production, according to people with knowledge of the matter. Banks including HSBC Holdings Plc, JPMorgan Chase & Co. and Credit Suisse Group AG have been invited to pitch for a role helping Aramco identify potential acquisition targets and advising on deals, the people said, asking not to be identified as the information is private. The energy company is seeking to bring foreign expertise in renewable energy into the kingdom, the people said, adding that first investments under the plan could occur this year. Saudi Arabia is planning to produce 10 gigawatts of power from renewable energy sources including solar, wind and nuclear by 2023 and transform Aramco into a diversified energy company. The kingdom also plans to develop a renewable energy research and manufacturing industry as part of an economic transformation plan announced by Deputy Crown Prince Mohammed bin Salman in April."

"Kuwait stocks, the world’s best performers this year, extended a rally to an 18th day, the longest winning streak in over a decade, as the country moved a step closer to a debut sale of dollar bonds. Gulf markets didn’t react to a U.S. travel ban on seven mainly Muslim countries.

The Kuwait Stock Exchange Index advanced 1.3 percent to 6,943.24 on Sunday, the highest level since November 2014. The Bahrain Bourse All Share Index finished at the highest level since 2015 and Oman’s MSM30 Index added 0.2 percent. Kuwait picked six banks to advise on its first international debt sale as the OPEC member shores up public finances after the slump in oil prices.

Last week’s selection of bond sale managers “is probably having the biggest impact in helping continue the market’s rally, in addition to the positive outlook of National Bank of Kuwait,” said Hasnain Malik, the Dubai-based head of equity research at Exotix Partners LLP. National Bank, the nation’s biggest lender, last week reported 2016 profit that beat estimates.

"Saudi Arabian money supply growth picked up in December in a sign that the economy is regaining strength after a slump last year caused by low oil prices and government austerity measures, central bank data showed on Sunday. Annual growth in M3 money supply, the broadest money supply measure, rose to 0.7 percent in December, its highest level since January 2016, from 0.1 percent in November. Growth in other forms of money supply accelerated by similar margins. A $17.5 billion international bond sale by the government in October eased pressure on its finances and encouraged authorities to start settling tens of billions of dollars in unpaid state debts to the private sector."

"Total demand for business and personal loans in the United Arab Emirates eased slightly in the October-December quarter but demand now seems to have stabilised, reflecting higher oil prices, a central bank survey showed on Sunday.

The net balance measure for business lending - the weighted percentage of respondents reporting an increase in demand for loans minus those reporting a fall in demand - was minus 1.3 in the last quarter, against minus 2.3 for the September quarter.

For the current quarter, respondents expected the net balance measure to rise to plus 20. This suggests a downward trend in overall credit demand since the first quarter of 2016 has ended, the central bank said."

"Dubai Investments, a diversified Dubai-based investment group, will press ahead with floating shares in subsidiary companies if a market rally extends over the next six to nine months, its chief executive said on Sunday.

Top of the list of candidates for an initial public offering was Emicool, a company that provides cooling systems for buildings by delivering chilled water through pipes. Its IPO has been mooted for several years.

"The market has started improving," Khalid Bin Kalban told reporters. "We need to see what momentum the market has and how the market is going to trend, and need six to nine months to gauge it. If it continues for the next six months, for example, then we can go ahead with our plans for IPOs.""

"Middle East stock markets were mixed on Sunday as uptrends in Saudi Arabia and Kuwait continued to divert regional investors' money away from the United Arab Emirates and Qatar. The Saudi index, which climbed 3.8 percent last week, rose a further 0.7 percent. Miner Ma'aden jumped 5.3 percent after issuing a statement describing progress in expanding its phosphate and bauxite operations. Builder Khodari climbed 1.5 percent and Nama Chemicals jumped by its 10 percent daily limit for a second straight day after announcing the outline of a plan to recover from accumulated losses that exceeded 75 percent of its capital. The plan includes eventually increasing capital to finance production of speciality chemical products and boost capacity, and the sale of assets of an investment affiliate."

"Among the throngs who descended on Davos this year, a big drawcard for some of the world’s most influential financiers and dealmakers was a Saudi chief executive on his first trip to the annual gathering. The attention Yasir al-Rumayyan enjoyed was a result of the transformation of the entity he heads: Saudi Arabia’s state-owned Public Investment Fund. For decades PIF was a little known and largely inactive holding fund. But a sudden burst of dealmaking and the central role it is being given in the kingdom’s reform plans have put it on course to become one of the world’s most powerful sovereign wealth funds. When Saudi Arabia completes the initial public offering of Saudi Aramco, scheduled for 2018, it is PIF that is expected to reap the rewards — the expectation is that it will be the depository for a potential $100bn from a 5 per cent sale of the state oil company."

"The ratings agency Standard & Poor’s (S&P) has downgraded the credit rating assigned to the emirate of Sharjah due to concerns about rising debt. The agency lowered its rating on Sharjah to BBB+/A-2 from its previous level of A/A-1, stating that Sharjah’s debt as a percentage of GDP has rapidly increased since 2014. "Sharjah’s fiscal underperformance below our expectations has resulted in a rapid increase in the emirate’s debt burden," S&P said in its note."

"Profitability of Gulf Cooperation Council (GCC) banks are expected to improve this year after going through a slowdown last year according to banking industry analysts and rating agencies.
“Earnings in GCC may show a growth of 5.9 per cent 2017 after a slight compression in 2016 of 3 per cent, with return on equity (RoE) stabilising at 13.1 per cent,” said Jaap Meijer, Director of Research at Arqaam Capital.
Although the operating environment for banks in the region remains challenging, the banking sector is expected to benefit from oil price stabilisation."

"Buyout firm Abraaj Group is planning to raise about $5 billion to $8 billion from investors this year, people familiar with the matter said, in what would be the emerging-market-focused investor’s largest fund.

The Dubai-based firm, which invests across markets from Asia to Latin America, is planning to raise the money from a pool of regional and international investors by the end of 2017, the people said, asking not to be identified as the information is private. The plans are in early stages and the size of the fund could fluctuate, they said.

"A new ban on U.S. travel for nationals of seven Middle Eastern countries caught the airline industry unprepared, with flight crew from those states also barred from entering, the International Air Transport Association said on Saturday. U.S. Customs and Border Protection (CBP) has briefed the global trade group that passport-holders from states such as Iran and Iraq, including cabin crew, will be barred entry to the United States, IATA said in an email to its member airlines, seen by Reuters. The email underscores airlines' confusion about the situation as well as the challenge some may face from crew scheduling. Airlines also stand to lose business: for instance, around 35,000 travelers from Iran visited the United States in 2015, according to the U.S. Department of Homeland Security. "

"Jordan's largest lender, Arab Bank Group, said on Saturday its 2016 net profit rose 20 percent to $533 million, saying the results were due to diversified operations and growth in revenue from core banking activities.

The bank, one of the Middle East's major financial institutions, said its loans book and customer deposits had continued to grow despite exchange-rate fluctuations.

Total loans rose 6 percent to $23.7 billion while deposits rose 3 percent to $33.6 billion at the end of last year compared with the same period the previous year."

"When Trump unexpectedly won the election, and futures staged one of their most dramatic rebounds in history, surging from limit down to solidly in the green, Wall Street promptly goalseeked their economic assumptions "chasing the price", quickly going from bearish to bullish, and nobody did it faster or more conclusively than Deutsche Bank, which seemingly overnight flipped from one of the biggest bearers of gloom on the outlook for the US economy, to one of its biggest cheerleaders. That however changed overnight, when DB's European equity strategist Sebastian Raedler highlighted that, according to the latest flash PMIs, global growth momentum hit a six-year high in January."

"Norway's $890-billion sovereign wealth fund, the world's largest, is concerned about the dearth of market liquidity, making it more costly to conduct trades, a senior official told Reuters on Wednesday.

The fund is one of the world's largest investors with stakes in around 9,000 firms globally and some $310 billion placed in fixed income at the end of the third quarter of 2016.

This means that when liquidity is thin, its transactions can move prices - at a cost to the fund - while they are being undertaken."

Thursday, 26 January 2017

"Supertankers from Iran’s state-owned oil fleet are sailing to Europe for the first time since sanctions were eased last year, as one of the world’s biggest crude shippers moves to step up deliveries.

The National Iranian Tanker Company currently has two giant vessels called ‘Snow’ and ‘Huge’ steaming towards the storage and trading port of Rotterdam after loading at Kharg Island earlier this month.

While European refiners have been taking small cargoes of Iranian crude since the loosening of sanctions linked to the nuclear deal with Tehran last year, these are the first vessels operated by the NITC rather than independent shippers. Each of the very large crude carriers (VLCCs) are capable of carrying more than 2m barrels of oil."

"Champagne corks should be popping in celebration across the exchange traded fund industry after a third successive year of record-breaking growth. But many ETF providers will have left their fizz on ice after again struggling to mount any meaningful challenge against BlackRock and Vanguard, the two largest fund houses globally, which have enormous passive investment businesses. Both asset managers registered record ETF inflows in 2016, tightening their grip on the market. Together the fund giants now control 55 per cent of the global ETF market between them — up from 52 per cent at the end of 2012."

"Abu Dhabi Commercial Bank says its main shareholder, the Abu Dhabi Investment Council (Adic), now owns 62.52 per cent of the lender after a capital reduction. Adic previously held a 59.08 per cent stake. The increase in Adic’s stake comes in the wake of a stock buyback programme that began in 2013 and concluded in January 2015."

"Qatar's investments in Russia will further strengthen ties between the Organization of the Petroleum Exporting Countries and non-member oil producers, OPEC Secretary-General Mohammed Barkindo told Reuters.

The Qatar Investment Authority (QIA) and global commodities trader Glencore have bought a 19.5 percent stake in Russia's Rosneft, the world's top listed oil company by output.

At a meeting with the heads of Glencore, Italian bank Intesa and the sovereign wealth fund QIA in the Kremlin on Wednesday, Russian President Vladimir Putin said Qatar would take part in hydrocarbon production in Russia."

"Gulf stock markets were mixed on Thursday, supported by strong global equities and oil prices, while Egypt surged on the back of the success of Cairo's international sovereign bond issue. The Saudi index edged up 0.1 percent though losing stocks outnumbered gainers by 99 to 52. Petrochemical blue chip Saudi Basic Industries added 1.0 percent, while telecommunications firm Zain Saudi rose 2.9 percent. Nama Chemicals jumped 9.6 percent on announcing the main elements of a recovery plan after accumulated losses exceeded 75 percent of its capital. The plan includes eventually increasing capital to finance production of specialty chemical products and boost capacity, and the sale of assets of an investment affiliate."

"This is part three in the series titled Clare Rewcastle Brown’s ‘heist of the century’. In this third and final part we will reveal how Husni and Muhyiddin knew back in 2013 that 1MDB was going to be sabotaged. However, instead of warning Najib about it, Muhyiddin approached Mahathir to discuss how they could help ensure that the sabotage is successful and use this to bring Najib down and at the same time walk away with a large sum of money. The Third Force For the past year or so, the name Aabar Investments PJS Limited has been making headlines the world over, a company registered in the BVI and the reason IPIC had a falling out with 1MDB. Currently, the two factions appear locked in dispute over the status of the company, which officials from IPIC insist isn’t one of theirs. The Malaysian Ministry of Finance (MoF) found this difficult to believe, considering that the BVI registered entity (Aabar-BVI) had officials from IPIC listed as stakeholders. That, and the fact that the MoF has in its possession agreements negotiated through Qubaisi in his capacity as the chair of an Abu Dhabi entity bearing a name similar to that of the BVI company. The MoF insists that Aabar-BVI is a subsidiary of IPIC. What the MoF did now know is someone from the ministry conspired to withhold information that had the potential of averting a dispute currently being arbitrated in a London court. And that person is none other than the former Second Minister of Finance, Dato’ Seri Ahmad Husni bin Mohamad Hanadzlah."

"Egypt may sell bonds in Japanese yen and Chinese yuan after the country raised $4 billion in its first foray into international capital markets since a currency devaluation in November. The sale of dollar-denominated bonds across three maturities on Tuesday was covered “multiple times,” and the country is now “studying carefully” future sales of notes in the Japanese and Chinese currencies, Finance Minister Amr El-Garhy said in an interview Wednesday with Bloomberg TV in London. The transaction comes two months after Egypt dismantled a currency peg, triggering a 50 percent devaluation as part of a package of reforms aimed at luring back foreign investors. Money managers buying the new notes were offered a premium -- about 30 basis points on the yield for 10-year securities in the sale over similar maturity bonds issued in 2015."

"Australia's over $35 billion Ichthys liquefied natural gas (LNG) export project has been dealt a blow as engineering firm CIMIC, involved in building the facility's power station, announced on Wednesday it was pulling the plug. "CIMIC Group advises that the ... consortium (building the power station) ... has terminated its contract with JKC Australia LNG Pty Ltd for the design, construction and commissioning of the Ichthys Combined Cycle Power Plant (CCPP) project," CIMIC said in a statement to the Australian Securities Exchange Ltd (ASX) on Wednesday. CIMIC spokeswoman Fiona Tyndall said "we are not going beyond what we have said in that ASX statement.""

"International equity index compiler MSCI said it welcomed reforms of the Saudi Arabian stock market and reiterated that it could launch in June a review of whether to include Saudi Arabia in its emerging market index. "MSCI specifically recognizes the extent and the pace of change undertaken by the Saudi Arabian authorities to open the local equity market to international institutional investors. MSCI will continue to monitor these positive developments," it said in a statement late on Wednesday. On the possibility of classifying Saudi Arabia as an emerging market, which would draw billions of dollars of international funds to the bourse, MSCI said:"

"Qatar’s sovereign welfare fund is planning to spend a further $2bn in Russia following a triumphant but controversial investment in state oil giant Rosneft. Vladimir Putin, Russia’s president, said on Wednesday that the Qatar Investment Authority would participate in new oil extraction projects in the country, without elaborating further. Abullah bin Mohammed Al Thani, the fund’s chief executive, said it would invest a further $2bn on top of $500m of existing investments in the country. Some of the investments would be made jointly with the $10bn sovereign Russian Direct Investment Fund, its partner in a deal last summer for St. Petersburg’s airport, he added. Mr Putin hosted Mr Al-Thani in the Kremlin at an event to celebrate QIA and Glencore’s deal to buy a 19.5 per cent stake in Rosneft, which concluded early this month."

Wednesday, 25 January 2017

"Mashreq Bank said on Wednesday net profit for 2016 fell to 1.9 billion, compared to the Dh2.4 billion recorded in 2015.
“While the region weathered tough business conditions in 2016, Mashreq had a reasonable year despite the economic climate and low oil prices,” Abdul Aziz Al Ghurair, Mashreq’s chief executive officer, said in an emailed statement.
Total operating income for 2016 was at Dh6.2 billion, a year-on-year increase of 3.2 per cent compared to 2015 operating income of Dh6 billion."

"Europe is poised to receive the most Iranian crude in about five years this month in a sign that the Persian Gulf nation may be regaining its share of a market it had lost to sanctions. Arrivals on supertankers will reach 622,581 barrels a day in January, the biggest flows for a single month since at least November 2011, according to ship-tracking and European Union data compiled by Bloomberg. Two Iranian supertankers -- Huge and Snow -- are en route, bringing about 4 million barrels between them. Sanctions halted all deliveries back in 2012 and they only restarted early last year as the measures were eased."

"President Vladimir Putin told trading giant Glencore (GLEN.L), Qatar's sovereign wealth fund, and Italian bank Intesa (ISP.MI) their businesses in Russia would be successful after they took part in the privatisation of a stake in Rosneft (ROSN.MM).

"I want to thank you for your trust, for your decision, want to express confidence that your business in Russia will be developing and developing successfully," Putin told a meeting with the heads of the companies.

The meeting was also attended by Igor Sechin, chief executive of Rosneft, in which the state sold a 19.5 percent stake last month to the consortium of Glencore and the Qatar Investment Authority."

While developed and developing countries issued record sums of debt in the years after the financial crisis, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates used the vast oil wealth to propel themselves to affluence.

The states — members of the six-country Gulf co-operation council — built skyscrapers, schools and motorways while bestowing generous subsidies, creating government jobs and imposing few taxes on their citizens."

"Deyaar’s profit fell by a quarter last year despite rising revenue as the Dubai property developer said it faced a "challenging" market.

Net profit fell 25.7 per cent to Dh216 million from Dh291 million a year earlier, according to a filing.

Deyaar said that company revenue for last year increased 66.5 per cent compared with a year ago to Dh428 million. The company said that was mainly because of construction progress at The Atria and Mont Rose hotel apartment projects."

"Investment Corp of Dubai (ICD), the Dubai government’s main investment arm, set initial price thoughts for a 10-year US dollar sukuk issue in the area of 290 basis points over mid-swaps, a document from arrangers showed on Wednesday. The ijara sukuk, which has a commodity murabaha component, will be benchmark-sized, which is understood to mean at least $500 million (Dh1.8 billion). The issue is expected to be today’s business, the document said. Bookrunners are Citi, Dubai Islamic Bank, Emirates NBD Capital, HSBC, J.P. Morgan, National Bank of Abu Dhabi and Standard Chartered."

"More than a month after Russia announced one of its biggest privatizations since the 1990s, selling a 19.5 percent stake in its giant oil company Rosneft, it still isn't possible to determine from public records the full identities of those who bought it.

The stake was sold for 10.2 billion euros to a Singapore investment vehicle that Rosneft said was a 50/50 joint venture between Qatar and the Swiss oil trading firm Glencore.

Unveiling the deal at a televised meeting with Rosneft's boss Igor Sechin on Dec. 7, President Vladimir Putin called it a sign of international faith in Russia, despite U.S. and EU financial sanctions on Russian firms including Rosneft."

"Gulf stock markets were mostly firm in early trade on Wednesday with Saudi Arabia and Kuwait leading the region up, as they have for several days.

The Saudi index climbed 0.7 percent in the first hour. Builder Khodari, which has been strong in the past week on expectations for a better Saudi construction market this year as austerity steps slow, surged 4.8 percent.

Tuesday, 24 January 2017

"Saudi Arabian Oil Co. is asking banks including Goldman Sachs Group Inc. and HSBC Holdings Plc to pitch for an advisory role on its initial public offering as it pushes ahead with plans for the world’s largest share sale, three people with knowledge of the matter said.

The company has also sent out the so-called request for proposals to lenders including Credit Suisse Group AG and Morgan Stanley, the people said, asking not to be identified as the process is private. Aramco, as it’s known, is targeting the second or third quarter of 2018 for the IPO and expects to select banks later this year, two of the people said.

Saudi Arabia plans to sell less than 5 percent of the company as part of plans by Deputy Crown Prince Mohammed bin Salman to set up the world’s biggest sovereign wealth fund and reduce the economy’s reliance on hydrocarbons. The sale’s estimated size of $100 billion would make it the largest ever, dwarfing the $25 billion raised by Chinese internet retailer Alibaba in 2014."

With the fourth-quarter earnings reporting season more or less over, many Saudi firms have posted flat or weak profits because of government austerity steps and a sluggish economy. Over half a dozen major firms, including food maker Savola and several banks, missed analysts' estimates by wide margins."

"Of the many quandaries investors must grapple with this year, high on their list is Donald Trump’s relationship with Vladimir Putin. Not far behind is this — should they throw off their instinctive caution about Russia and its president, and push the rouble a lot higher? The turnround in the Russian rouble’s fortunes largely reflects the recovery of oil, the country’s biggest export. That has helped drive the currency higher by nearly a third to about Rbs60 in the past year. Notably, the rouble has outperformed every other major or emerging market currency against the dollar in the last three, six and 12 months. Factors beyond oil’s rebound also explain the rally. High interest rates in Russia make it an attractive carry trade opportunity for speculative investors borrowing in currencies with lower rates, while Mr Trump’s election has thrown up the prospect of a US rapprochement with Russia and the easing of western sanctions."

Mouwasat Medical Services jumped 4 percent after saying its board was recommending a cash dividend of 2.5 riyals per share for 2016, up from 2 riyals in the previous year. The company reported an estimate-beating 34.2 percent rise in fourth-quarter profit last week."

"Emirates' announcement on Monday that it would start flying to the United States with a stop for passengers in Greece sparked a strong reaction from a lobby group representing U.S. competitors who accused it of competing unfairly through state subsidies.

The world's largest long-haul airline said it would start daily flights to New Jersey's Newark Liberty International Airport via Athens on March 12.

Emirates was "flagrantly violating" the air services agreement that allows it to fly to the United States, said the Partnership for Open & Fair Skies, which represents Delta Air Lines (DAL.N) and other U.S. airlines."

"The veteran chief executive of Abu Dhabi's Etihad Aviation Group, which owns one of the Middle East's top airlines, will leave this year, but the carrier remains committed to a system of equity alliances that he developed, Etihad said on Tuesday.

Australian James Hogan, 60, who over the past 10 years built Etihad into an aggressive competitor to Dubai's Emirates and Qatar Airways, will step down as president and CEO of the group in the second half of 2017. Chief financial officer James Rigney will also leave this year, Etihad said.

Chairman Mohamed Mubarak Fadhel al-Mazrouei said Etihad was continuing a "company-wide strategic review" which could include adjustments to the network of equity partnerships with other carriers that Hogan used to engineer rapid growth at Etihad."

"The UAE’s economy is set to perform better in 2017 than the previous year, which proved to be slower and more challenging. Overall growth will reach 2.8 per cent in 2017 from 2.1 per cent in 2016. The outlook for the UAE is quite positive given its more diversified nature compared to other more oil-dependent economies of the Arabian Gulf. Oil prices are on the cusp of recovery following last year’s Opec accord, which is proving to be reassuring for the UAE as well as the rest of the Gulf economies. Dubai’s hosting of Expo 2020 will drive government spending and investment. The event will draw in a large number of visitors, boosting private consumption and services exports."

"OPEC’s two biggest suppliers to the U.S. shrugged off a vow by President Donald Trump to end dependence on the group’s oil, saying the world’s biggest economy would continue to need crude from abroad. The U.S. is “closely integrated in the global energy market,” Saudi Arabia’s Energy and Industry Minister Khalid Al-Falih said, while his Venezuelan counterpart Nelson Martinez said he expects his country’s crude exports to the world’s top consumer to remain stable. “The positions that the U.S. and Saudi Arabia take in global energy are very important for global economic stability,” Al-Falih said Sunday at a meeting of producing countries in Vienna. He added that Saudi Arabia was looking forward to working with the Trump administration."

"Saudi Arabia outperformed other Gulf stock markets on Monday as several major stocks bounced after poor earnings earlier this week, while a bull run in Kuwait slowed and Egypt rebounded sharply from a slide triggered by tax fears.

The company's earnings were squeezed in part by tough price competition in a slowing Saudi economy, but the stock's rebound suggested many investors were looking forward to a stronger non-oil economy this year as Riyadh delays new austerity steps."

"Shares in Arabtec Holding have been suspended pending the release of its fourth-quarter earnings statement. A notice from the Dubai Financial Market this morning stated that "as its Board of Directors meeting is being held today", the construction firm’s shares would not trade from 11.30am until results are disclosed. The meeting is being held in Abu Dhabi at the offices of the parent company of Aabar, which is the largest shareholder in Arabtec, with a 36 per cent stake. EFG Hermes expects Arabtec’s losses to narrow in the fourth quarter of 2016 compared to a year earlier, according to Reuters."

"Abu Dhabi, holder of about 6 percent of the world’s oil reserves, will hold fixed-income investor meetings in Asia this week, a person familiar with the matter said. The emirate, capital of the United Arab Emirates, will meet investors in Hong Kong, Taipei and Singapore from Monday, said the person said, asking not to be identified because he wasn’t authorized to speak publicly. The meetings are arranged by HSBC Holdings Plc and it isn’t clear if the emirate plans to sell bonds after the roadshow, said the person. Gulf Arab monarchies are selling bonds to shore up public finances after the slump in oil prices put a strain on government budgets. Kuwait picked six banks to advise on its first international debt sale, people familiar with the matter said this week. Saudi Arabia, Qatar and Abu Dhabi raised more than $30 billion from global bond markets last year to finance their budget deficits. "

"Dubai ports operator DP World said on Monday it was partnering with Canadian pension fund manager Caisse de dépôt et placement du Québec to create an investment vehicle worth US$3.7 billion that would invest in ports and terminals worldwide. DP World will hold a 55 percent share in the vehicle while Caisse de dépôt, a long-term institutional investor that manages funds for public pension and insurance plans, will own 45 percent. The platform will have "a focus on investment-grade countries" excluding the United Arab Emirates, and will invest mostly in existing assets but with up to 25 percent in greenfield opportunities, DP World said. "

"Russia overtook Saudi Arabia in 2016 to became China's biggest crude oil supplier for the first year ever, customs data showed on Monday, boosted by robust demand from independent Chinese "teapot" refineries.

Russian shipments surged nearly a quarter over 2015 to about 1.05 million barrels per day (bpd), the data showed, with Saudi Arabia coming in a close second with 1.02 million bpd, up 0.9 percent in 2016 versus the previous year. China is the world's second-largest oil buyer and the fastest-growing major importer.

"Gulf stock markets mostly rose in early trade on Monday with Kuwait continuing a bull run that has made it by far the region's best-performing bourse this year. The Kuwaiti index, which rose 15.6 percent between the end of last year and Sunday, added a further 1.1 percent on Monday morning. Trading volume looked set to surpass Sunday's very high level and hit a new 43-month high. The country's biggest bank, National Bank of Kuwait (NBK) , climbed 1.5 percent and logistics giant Agility surged 4.4 percent. "

"Share prices in Kuwait jumped in very heavy trade on Sunday, the top performing market in a strong Gulf region, while tax fears continued to weigh on prices in Egypt.

The Kuwaiti market index surged 3.2 percent, its biggest rise in more than two years, to a 23-month high, while trading volume was the biggest since mid-2013. The index is up 15.6 percent so far this year, far outperforming other Gulf bourses. The narrower Kuwait 15 index of blue chips is up 9.6 percent.

The market attracts little non-Arab foreign investment and with a trailing price/earnings ratio near 15 times, it is not cheap compared with its neighbours or emerging markets in general."

"Royal Dutch Shell has agreed to sell its 50 per cent stake in a Saudi Arabian petrochemicals joint venture for $820m, the latest in a series of disposals aimed at reducing debts and streamlining the Anglo-Dutch group’s sprawling portfolio of assets. The deal will give full control of the business, known as Sadaf, to Shell’s partner, Saudi Basic Industries, the Saudi state-controlled chemicals group known as Sabic. The agreement end a 37-year alliance between Shell and Sabic, during which time Sadaf became the biggest petrochemical complex in the Middle East with combined output of 4m metric tonnes per year from six large plants in the Gulf city of Jubail."

"The UAE is expected to lead economic growth in the Arabian Gulf this year amid higher spending that will be spurred on by recovering oil prices, according to the latest research from the National Bank of Abu Dhabi (NBAD). While the region is heavily dependent on oil, the UAE has been among the countries in the region that have done a better job of diversifying its economy and coming up with new streams of revenue, according to the bank’s annual global investment outlook. "The UAE Government was the first in the GCC to implement fiscal measures such as subsidy reduction, municipality fee increases and alternative sources to fund government spending," NBAD said."

"The rally in Saudi Arabia’s Tadawul index, which gained 31 per cent last year, is not sustainable, according to National Bank of Abu Dhabi (NBAD). Saudi market is currently trading at a 17 times price to earnings multiple, which is at premium to MSCI emerging market multiple of 15.1 times and also at higher end of its historical average, the bank said in its yearly investment outlook, released Sunday. “We think the current, across the board market rally might not be sustainable in 2017 given the high valuations,” NBAD stated."

"Dubai Duty Free cut prices after a weaker pound led to lower airport sales and expects to boost revenue by 5 percent this year, driven by spending by Chinese travelers. “We have been negotiating with our suppliers, a lot of whom we pay in dollars,” the airport retailer’s Chief Executive Officer Colm McLoughlin said in an interview on Sunday. “They cooperated very well with us and we’ve been able to correct this business of being perceived as expensive." The government-controlled company, which operates at Dubai International Airport -- the word’s busiest by international traffic, posted a 3 percent drop in sales to $1.85 billion in 2016. The decline was partly due to the pound’s slump versus the dollar in the second half of the year after Britain voted to leave the European Union in June, the CEO said."

"OPEC’s two biggest suppliers to the U.S. shrugged off a vow by President Donald Trump to end dependence on the group’s oil, saying the world’s biggest economy would continue to need crude from abroad. The U.S. is “closely integrated in the global energy market,” Saudi Arabia’s Energy and Industry Minister Khalid Al-Falih said, while his Venezuelan counterpart Nelson Martinez said he expects his country’s crude exports to the world’s top consumer to remain stable. “The positions that the U.S. and Saudi Arabia take in global energy are very important for global economic stability,” Al-Falih said at a meeting of producing countries in Vienna. He added that Saudi Arabia was looking forward to working with the Trump administration."

"Kuwaiti stocks advanced for a 13th day as trading jumped to the highest level in more than three years. Saudi Arabia’s main equity gauge rallied after the nation’s oil minister said output will remain below its OPEC commitment level.

Kuwait’s SE Price Index added 3.2 percent, the most since December 2014, bringing its gain this year to 16 percent, the best performance among more than 90 gauges tracked by Bloomberg globally. With 880 million shares exchanged, volume was the highest in the Middle East.

The rally has been fueled by bets that the Capital Markets Authority and the local bourse will implement steps to boost inflows into an exchange where trading in most companies has lagged."

"Mubadala Development and International Petroleum Investment Company (Ipic) have named the new board for their US$125 billion merged company, the government announced on Saturday. The chairman of the board of the combined conglomerates will be Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, with Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs, as vice chairman. Khaldoon Al Mubarak, the Mubadala chief executive, will be chief executive of the new merged entity, which has been named Mubadala Investment Company, which will be one of the world’s largest strategic investment companies with 68,000 employees."

"Kuwait picked six banks to advise on its first international debt sale as the OPEC member joins other Gulf Arab monarchies shoring up public finances after the slump in oil prices.

Citigroup Inc., JPMorgan Chase & Co. and HSBC Holdings Plc are working as lead managers on the sale, the people said, speaking on condition of anonymity because the information isn’t public. Deutsche Bank AG, Standard Chartered Plc and NBK Capital were also hired as advisers, they said.

Saudi Arabia, Qatar and Abu Dhabi raised more than $30 billion from global bond markets last year to finance their budget deficits. The Kuwaiti government said in July it may raise as much as $10 billion from global debt markets."

"Abu Dhabi's government merged two of its top investment funds on Saturday to strengthen their financial clout in an era of low oil prices, creating a company with assets totaling about $125 billion. The new fund, Mubadala Investment Co, was formed by merging Mubadala Development Co and International Petroleum Investment Co, which own corporate stakes in the energy industry and other sectors across the world. The new firm's assets will total about $125 billion, based on valuations at the end of 2015, make it the world's 14th largest sovereign fund, according to data from the Sovereign Wealth Fund Institute, which tracks the industry."

"Saudi Basic Industries Corp (SABIC) 2010.SE has signed an agreement to acquire the 50 percent that it does not already own in its petrochemical venture with Shell Arabia, a unit of Royal Dutch Shell (RDSa.L), for $820 million, SABIC said on Sunday.

"As per the partnership agreement between the two companies that stipulates the right of SABIC to renew or end the partnership by the end of 2020...SABIC decided to acquire the full stake of Shell, which is 50 percent," it said.

SABIC, one of the world's largest petrochemical firms, said the $820 million figure was based on the net value of the venture's assets. It said the acquisition was in line with a strategy to develop its successful investments.

"Weak fourth-quarter earnings at several major Saudi Arabian companies dragged down that market on Sunday, while most other Gulf bourses were firm. Tax fears continued to weigh on Egypt. The Saudi index dropped 0.4 percent as food maker Savola plunged 6.2 percent. It swung to net loss of 964.3 million riyals ($257.2 million) in the quarter from a profit of 515.3 million riyals a year ago, and said it did not plan to pay quarterly dividends in 2017. Analysts polled by Reuters had on average forecast Savola would make a quarterly profit of 53.6 million riyals."

"The first act of the Trump administration after Friday’s inauguration was to post on the White House website an America First Energy Plan, which promises to free America "from dependence on foreign oil". The statement of intent also says that president Donald Trump will ditch "harmful and unnecessary policies, such as the Climate Action Plan and the Waters of the US rule," the former being former president Barack Obama’s detailed 2013 plan to reduce US carbon dioxide emissions and promote renewable energy sources, the latter a 2015 initiative to beef up protection for US waterways from industrial pollution. The new administration says, however, that "for too long we’ve been held back by burdensome regulations on our energy industry", pledging to take a more pro-hydrocarbon path. "

"The Dubai Financial Market General Index (DFMGI) pulled back by 30.20 or 0.81 per cent last week to end at 3,690.39, as volume fell. Performance among individual issues was mixed with 18 advancing while 20 declined. At the beginning of the week the index managed to peak slightly above the prior week’s high of 3,728.80 but quickly encountered resistance at 3,736.74, the high for the week. The low for the week was 3,648.32, above the prior week’s low of 3,627.86. Therefore, even though the week ended lower the uptrend was maintained on a weekly basis as we did have a higher weekly high and higher weekly low. The short-term uptrend is now beginning its fourth week and it is part of a larger ten-week uptrend that begun off the November swing low. In turn, that uptrend is part of a larger 12-month uptrend that starts from the January 2016 low. As discussed last week this larger 12-month uptrend has become dominant again as the DFMGI broke out of an eight-month consolidation phase two weeks ago and triggered a bullish continuation of this trend. Therefore, the probability of the DFMGI eventually continuing higher has increased."